Speculators hoping to make a quick killing out of currency turbulence had probably better steer clear of the New Zealand dollar.
In a world of geo-political tensions, from trade wars to Brexit with ever-louder talk of a recession, the dollar has held remarkably steady against the currencies of the country’s major trading partners.
Take the denomination from which New Zealand’s money (and that of neighbouring Australia) takes its name, the US dollar.
One-cent move in a year
Currently, the NZ$ is worth 68 US cents. A month ago, on 9 March, it traded – again – at 68 cents.
On 11 December, it was worth 69 cents, and on 10 October it was worth 65 cents.
You would need to go back a year to 9 April 2018 to see any significant break-out from this range, when it stood at 73 cents.
But while its performance against the US currency is stable, it is a picture of volatility compared with the euro. Currently, the NZ$ is worth 60 euro cents. A month ago, on 9 March, it was worth 61 euro cents.
On 11 December, the rate was 61 euro cents, from 56 euro cents on 10 October. A year ago, on 10 April 2018, the exchange rate was the same as it stads today, 60 euro cents.
In terms of sterling, currency of Commonwealth partner the UK, there was little more action. Currently, the NZ$ is worth £0.52. A month ago, on 9 March, it traded at the same rate.
On 11 December, the NZ$ was worth £0.55, having been at £0.49 on 10 October. A year ago, its rate of £0.52 stood identical to its rate today.
Nor is there much more action when it comes to New Zealand’s closest neighbour. The NZ$ is currently worth 94 Australian cents, having been at 96 cents on 9 March, 95 cents on 11 December, 91 cents on 10 October and 95 cents a year ago, on 9 April last year.
In other words, over the course of 12 months, the rate against the Australian dollar has shifted by just one cent.
Steady economic expansion
In large part, currency stability reflects economic success. In its most recent Article IV health check last year, the International Monetary Fund (IMF) noted: “Since 2011, New Zealand has enjoyed an economic expansion with notable momentum. Reconstruction spending after the 2011 and 2016 earthquakes was an important catalyst, but the expansion has also been supported by accommodative monetary policy, a net migration wave, improving services exports (especially tourism), and stronger terms of trade.”
It added: “While the outlook remains favourable and near-term risks are broadly balanced, medium-term risks are tilted to the downside including tighter-than-expected global financial conditions and growing protectionist policies in other countries.
“Against this background, [we] encouraged continued sound policy implementation and reforms to support inclusive growth.”